Colorado HB26-1311: post a bond instead of having retainage held

What changed

The act amends section 38-46-103 of the Colorado Revised Statutes. The section's own heading says what it covers:

C.R.S. 38-46-103, heading

Private construction contracts - retainage - conditions precedent.

The session law prints a key on its pages saying how to tell old text from new:

Session law, key printed on the page

Capital letters or bold & italic numbers indicate new material added to existing law; dashes through words or numbers indicate deletions from existing law and such material is not part of the act.

The first sentence of the section is in ordinary type, so it is existing law. The five percent cap on private job retainage was already there before this act:

C.R.S. 38-46-103(1)(a), first sentence, existing law

A property owner, contractor, or subcontractor shall not withhold as retainage more than five percent of the price of the work completed under the contract or subcontract.

What the act adds is printed in capitals. The heart of it is the new subsection (1)(b)(I):

C.R.S. 38-46-103(1)(b)(I), new

IN LIEU OF RETAINAGE, A SUBCONTRACTOR OR CONTRACTOR MAY TENDER A RETAINAGE BOND IN AN AMOUNT NOT TO EXCEED FIVE PERCENT OF THE MONEY EARNED BY THE SUBCONTRACTOR OR CONTRACTOR. IF THE CONTRACTOR OR SUBCONTRACTOR TENDERS A RETAINAGE BOND MEETING THE REQUIREMENTS OF SUBSECTIONS (1)(b)(II) AND (1)(b)(III) OF THIS SECTION, THE PROPERTY OWNER, CONTRACTOR, OR SUBCONTRACTOR SHALL ACCEPT THE RETAINAGE BOND AND RELEASE THE RETAINAGE COVERED BY THE RETAINAGE BOND.

Printed in capitals in the session law, which marks it as new material.

A retainage bond is a newly defined term, and it has to come from an insurer licensed to issue it in Colorado:

C.R.S. 38-46-101(4.5), new

"RETAINAGE BOND" MEANS A SURETY BOND THAT IS ISSUED BY AN INSURER LICENSED TO ISSUE THE BOND IN COLORADO AS ASSURANCE FOR THE PERSON ACCEPTING THE BOND THAT: (a) A CONTRACT OR SUBCONTRACT WILL BE SATISFACTORILY COMPLETED; OR (b) THE GOODS, MATERIALS, OR EQUIPMENT MEETS THE SPECIFICATIONS NECESSARY FOR SATISFACTORY PERFORMANCE OF A CONTRACT OR SUBCONTRACT.

Who can use it, and who cannot

Either a contractor or a subcontractor can tender the bond, and whoever is holding the retainage, the property owner, a contractor or a subcontractor, has to accept one that meets the act. When an owner takes a bond from a contractor, the contractor has to take a like bond from any sub that offers one:

C.R.S. 38-46-103(1)(b)(V), new

WHEN A PROPERTY OWNER ACCEPTS A BOND IN LIEU OF RETAINAGE FROM A CONTRACTOR, THE CONTRACTOR MUST ACCEPT A LIKE BOND FROM ANY SUBCONTRACTOR THAT SUBMITS A BOND IN LIEU OF RETAINAGE UNDER THIS SUBSECTION (1)(b).

C.R.S. 38-46-101(2.5), new

"LIKE BOND" MEANS A RETAINAGE BOND SUBMITTED BY A SUBCONTRACTOR TO A CONTRACTOR OR SUBCONTRACTOR THAT IS SUBSTANTIALLY EQUIVALENT TO THE RETAINAGE BOND SUBMITTED BY THE CONTRACTOR OR SUBCONTRACTOR TO THE PROPERTY OWNER OR CONTRACTOR.

Publicly owned property is out. The bond paragraph does not apply where the property is owned by a public entity, and that includes a contract that comes out of a public-private partnership:

C.R.S. 38-46-103(1)(b)(VI), new

THIS SUBSECTION (1)(b) DOES NOT APPLY TO A CONTRACT OR SUBCONTRACT THAT CONCERNS PROPERTY OWNED BY A PUBLIC ENTITY. THE EXEMPTION DESCRIBED IN THIS SUBSECTION (1)(b)(VI) INCLUDES A CONTRACT OR SUBCONTRACT THAT RESULTS FROM A PUBLIC-PRIVATE PARTNERSHIP.

This page reads the act and the section it amends. Article 46 has its own definitions section, 38-46-101, and the act adds the two definitions above to it. The rest of that section, and anything else in article 46 that decides which contracts count, is not quoted here. Nothing in the act itself carves out work on a house, but check article 46 before assuming it reaches your job.

From when: contracts created on or after August 12, 2026

The act applies by the date of the contract. In its own words:

HB 26-1311, section 3(2)

This act applies to contracts created on or after the applicable effective date of this act.

So a contract created before August 12, 2026 is outside the act, even if retainage is still being held on it after that date. The effective date itself is set by a formula, because the act could have been referred to the voters:

HB 26-1311, section 3(1)

This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 12, 2026, if adjournment sine die is on May 13, 2026); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.

The General Assembly's own site gives the dates that formula turns on. It records that the session adjourned sine die on May 13, 2026, and the bill page lists the act as law, with its session law, chapter 129, effective on 08/12/2026:

leg.colorado.gov, home page

The Second Regular Session of the Seventy-fifth General Assembly adjourned sine die on May 13, 2026.

leg.colorado.gov, HB26-1311 bill page, status

Became Law

leg.colorado.gov, HB26-1311 bill page, session law row

08/12/2026 129 Retainage Surety Bond Construction Contracts

The columns are effective date, chapter and title.

Where those dates are: Colorado General Assembly home page and HB26-1311 bill pageleg.colorado.gov

The act was approved on May 7, 2026:

Session Laws 2026, Chapter 129

Approved: May 7, 2026

The rest of the new paragraph, word for word

What the contractor or sub has to promise, and the bond it has to provide:

C.R.S. 38-46-103(1)(b)(II), new

TO COMPLY WITH SUBSECTION (1)(b)(I) OF THIS SECTION, THE CONTRACTOR OR SUBCONTRACTOR MUST PROVIDE A RETAINAGE BOND MEETING THE REQUIREMENTS OF SUBSECTION (1)(b)(III) OF THIS SECTION AND MUST: (A) FAITHFULLY PERFORM ALL THE PROVISIONS OF THE CONTRACT OR SUBCONTRACT; AND (B) PAY ALL LABORERS, SUPPLIERS, AND SUBCONTRACTORS AMOUNTS OWED UNDER THE CONTRACT OR SUBCONTRACT.

The rating an owner or contractor can ask for, and who carries the premium on a sub's share:

C.R.S. 38-46-103(1)(b)(III), new

THE PROPERTY OWNER OR CONTRACTOR MAY REQUIRE THAT THE AUTHORIZED SURETY HAVE A MINIMUM A.M. BEST, OR A SUCCESSOR INSTITUTION, FINANCIAL STRENGTH RATING, SO LONG AS THE REQUIRED MINIMUM RATING DOES NOT EXCEED "A-". THE CONTRACTOR MAY WITHHOLD THE SUBCONTRACTOR'S PORTION OF THE BOND PREMIUM, TO THE EXTENT THE CONTRACTOR PROVIDES A RETAINAGE BOND TO OBTAIN A RELEASE OF THE SUBCONTRACTOR'S RETAINAGE.

Where a claim against the bond stands. Article 22 of title 38 is the article that holds section 38-22-119, the Colorado lien waiver rule:

C.R.S. 38-46-103(1)(b)(IV), new

THE CONTRACTOR OR PROPERTY OWNER MUST ACCEPT A BOND MEETING THE REQUIREMENTS OF SUBSECTION (1)(b)(III) OF THIS SECTION. THE SUBCONTRACTOR'S OR CONTRACTOR'S BOND AND THE PROCEEDS FROM THE BOND ARE SUBJECT TO A CLAIM AND LIEN IN THE SAME MANNER AND PRIORITY AS SET FORTH IN ARTICLE 22 OF THIS TITLE 38.

Together with (1)(b)(I), (V) and (VI) above, that is every word of the new subsection (1)(b), quoted from the official session law and checked against a saved copy of it when this page is built. The session law also strikes one word from the second sentence of (1)(a), and that sentence is not quoted here. Read the act and the bill page there:

Read the law: Session Laws 2026, Chapter 129 (HB 26-1311) and HB26-1311 bill pageleg.colorado.gov

What to do differently

Only what the text supports:

• Check the contract date and the property. The bond right is only in contracts created on or after August 12, 2026, and not where the property is owned by a public entity or the contract comes out of a public-private partnership.
• If retainage is tying up your margin, price a retainage bond. It has to be issued by an insurer licensed to issue it in Colorado, and it cannot be for more than five percent of the money you have earned.
• If the owner or contractor asks for a surety rating, the act lets them require an A.M. Best rating, or one from a successor institution, with a minimum no higher than A-. A demand for a higher minimum is more than the act allows.
• Once you tender a bond that meets (1)(b)(II) and (III), whoever is holding the retainage has to accept it and release the retainage it covers.
• If you are a contractor and the owner took your bond, you have to take a like bond from any sub that offers one.
• If you are a contractor whose bond gets a sub's retainage released, the act lets you withhold the sub's portion of the bond premium.
• The act does not set a form or a deadline for tendering the bond. Keep a copy of the bond and a record of the date you tendered it.
• The five percent cap on what can be held has not changed. Check the retainage clause against it either way.

Questions people ask

Can the owner refuse my retainage bond in Colorado?

Not one that meets the act, on a contract the act covers. C.R.S. 38-46-103(1)(b)(I) says that when a contractor or sub tenders a retainage bond meeting (1)(b)(II) and (III), the property owner, contractor or subcontractor shall accept it and release the retainage it covers.

How big can the bond be?

No more than five percent of the money earned by the contractor or sub tendering it, under (1)(b)(I). The retainage released is the retainage the bond covers.

Can the owner demand an A+ rated surety?

No. Under (1)(b)(III) the owner or contractor may require a minimum A.M. Best financial strength rating, or one from a successor institution, but only so long as the required minimum does not exceed A-.

Does HB26-1311 apply to public projects?

No. Subsection (1)(b)(VI) says the bond paragraph does not apply to a contract or subcontract that concerns property owned by a public entity, and that the exemption includes one that results from a public-private partnership.

My contract was signed in July 2026. Can I use a retainage bond under the act?

Not under this act. Section 3(2) says it applies to contracts created on or after its effective date, and the Colorado General Assembly's bill page lists that date as 08/12/2026.

Retainage calculator: what is held, what is payable, what is left at closeout · Colorado lien waiver rules under C.R.S. 38-22-119

Other state changes to how contractors get paid are on the construction law changes page.

This page quotes Colorado Session Laws 2026, Chapter 129 (HB 26-1311), amending C.R.S. 38-46-101 and 38-46-103 and explains what it says. It is not legal advice, and a statute can be amended. Read the linked section before you rely on it.